Acarix — Rights funding completed

Acarix — Rights funding completed

Acarix has competed a rights issue of 28.67m shares at SEK1.50/share to raise SEK43m before expenses. The proceeds will fund a programme of market development and clinical trials. The process for German public reimbursement is underway. In the UK, NICE has carried out a technical assessment enabling a dialogue to start. Acarix is now developing a US market entry strategy and assessing the likely FDA trial needs.

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Written by

Acarix

Rights funding completed

Rights Issue

Healthcare equipment
& services

6 November 2019

Price

SEK1.60

Market cap

SEK83m

Cash (SEKm) at 30 June 2019

39

Shares in issue
(post-rights October 2019)

51.7m

Free float (est)

76%

Code

ACARIX

Primary exchange

Nasdaq First North Premier

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(48.1)

(54.3)

(68.3)

Rel (local)

(52.3)

(59.0)

(72.7)

52-week high/low

SEK5.4

SEK1.6

Business description

Acarix, a Swedish company with Danish origins, has developed the CE-marked CADScor to help doctors rule out stable coronary artery disease. About half of patients can be ruled out from further expensive testing. Full EU sales could start from 2020, with US sales possible from 2023.

Next events

Q319 results

14 November 2019

Analyst

Dr John Savin MBA

+44 (0)20 3077 5735

Acarix is a research client of Edison Investment Research Limited

Acarix has competed a rights issue of 28.67m shares at SEK1.50/share to raise SEK43m before expenses. The proceeds will fund a programme of market development and clinical trials. The process for German public reimbursement is underway. In the UK, NICE has carried out a technical assessment enabling a dialogue to start. Acarix is now developing a US market entry strategy and assessing the likely FDA trial needs.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/17

0.64

(30.74)

(1.29)

0.0

N/A

N/A

12/18

1.02

(42.25)

(1.83)

0.0

N/A

N/A

12/19e

2.62

(43.33)

(1.56)

0.0

N/A

N/A

12/20e

4.11

(44.65)

(0.86)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. Average shares in issue changed in October 2019.

Rights issue completed

The rights issue raised SEK43m before expenses from 28.67m new shares. The fresh cash will help develop a broader base of CADScor users. A solid user base is crucial for increased high-margin patch sales and the key to profit. The new cash will also support further clinical developments, as one weakness in the Acarix case has been limited data (although high-quality) based on Danish experience alone. Acarix needs further clinical and economic data to drive growth in CADScor adoption. It will be interesting, in our view, to see if the cash raised is enough to start clinical development in the US after investing in marketing in Germany and ongoing trials. Acarix’s intention was to raise SEK52m gross.

Developing the market

Acarix has filed a new randomised 2,000-patient clinical trial (FILTER-SCAD) to look at prospective outcomes. This Danish trial (NCT04121949) is listed as active but not recruiting, with data possible from 2021.The study will compare CADScor to standard evaluation over 12 months. A meta-analysis of completed studies using 2,245 patients was published in July 2019. In May 2019, the UK health service published an innovation review of CADScor. Acarix has also indicated that it plans to discuss with the US FDA which trials will be required for a US approval. It will also look to recruit US marketing partners to support a future market entry. We do not include US trial costs in the 2020 forecast as the timeline remains unclear.

Valuation: Revised 2020 value SEK7.23 per share

Acarix had SEK39m cash on 30 June 2019, with an H119 cash outflow of SEK18.7m. The rights issue in effect covers our forecast 2019 cash outflow, so year-end cash should be about level with December 2018 depending on costs. Our valuation assumes 2020 German reimbursement with strong sales from 2021; the sales team is being enlarged. Sales might develop in other European countries. We also assume US sales from 2023, so initial development of a US strategy is very encouraging. Our indicative value, adjusted for debt and minor working capital changes, is rebased to 1 January 2020 and is now SEK374m (SEK369m) or SEK7.23 per share after the rights issue dilution (formerly SEK16). Our forecasts will be reviewed after Q3 sales are reported.

Exhibit 1: Financial summary

SEK000s

2017

2018

2019e

2020e

Year end 31 Dec

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

638

1,024

2,623

4,105

Cost of Sales

(208)

(316)

(577)

(874)

Gross Profit

430

708

2,046

3,232

EBITDA

 

 

(29,499)

(41,028)

(41,959)

(43,273)

Operating Profit (before amort. and except.)

 

 

(30,743)

(42,523)

(43,454)

(44,768)

Intangible Amortisation

(1,261)

(1,430)

(1,430)

(1,430)

Exceptionals

-

-

-

-

Operating Profit

(32,004)

(43,953)

(44,884)

(46,198)

Other

-

-

-

-

Net Interest

7

273

120

120

Profit Before Tax (norm)

 

 

(30,736)

(42,250)

(43,334)

(44,648)

Profit Before Tax (FRS 3)

 

 

(30,736)

(42,250)

(43,334)

(44,648)

Tax

960

-

-

-

Profit After Tax (norm)

(29,776)

(42,250)

(43,334)

(44,648)

Profit After Tax (FRS 3)

(29,776)

(42,250)

(43,334)

(44,648)

Average Number of Shares Outstanding (m)

23.0

23.0

27.8

51.7

EPS - normalised (ore)

 

 

(129.31)

(183.48)

(155.85)

(86.37)

EPS - FRS 3 (ore)

 

 

(129.31)

(183.48)

(155.85)

(86.37)

Dividend per share (ore)

0.0

0.0

0.0

0.0

Gross Margin (%)

67.4

69.1

78.0

78.7

EBITDA Margin (%)

(4,624)

(4,007)

(1,600)

(1,054)

Operating Margin (before GW and except.) (%)

(4,819)

(4,153)

(1,657)

(1,091)

BALANCE SHEET

Fixed Assets

 

 

25,191

23,696

22,201

20,706

Intangible Assets

20,351

18,921

17,491

16,061

Tangible Assets

0

0

0

0

Acquired rights

4,840

4,775

4,710

4,645

Current Assets

 

 

108,865

71,501

68,362

25,705

Stocks

1,945

2,625

2,625

2,625

Debtors

2,468

3,857

3,857

3,857

Cash

103,457

65,019

61,880

19,223

Other

995

0

0

0

Current Liabilities

 

 

(5,118)

(7,321)

(7,321)

(7,817)

Creditors

(1,464)

(2,504)

(2,504)

(3,000)

Short term borrowings

0

0

0

0

Short term leases

0

0

0

0

Other

(3,653)

(4,816)

(4,816)

(4,816)

Long Term Liabilities

 

 

0

0

0

0

Long term borrowings

0

0

0

0

Long term leases

0

0

0

0

Other long-term liabilities

0

0

0

0

Net Assets

 

 

128,939

87,876

83,242

38,594

CASH FLOW

Operating Cash Flow

 

 

(41,506)

(39,586)

(41,959)

(42,777)

Net Interest

7

273

120

120

Tax

960

977

0

0

Capex

(2,984)

0

0

0

Acquisitions/disposals

0

0

0

0

Financing

1,203

0

43,000

0

Dividends

0

0

0

0

Other

0

0

(4,300)

0

Net Cash Flow

(42,320)

(38,336)

(3,139)

(42,657)

Opening net debt/(cash)

 

 

(145,895)

(103,457)

(65,019)

(61,881)

HP finance leases initiated

-

-

-

-

Other

(118)

(102)

-

-

Closing net debt/(cash)

 

 

(103,457)

(65,019)

(61,881)

(19,223)

Source: Acarix accounts, Edison Investment Research forecasts

General disclaimer and copyright

This report has been commissioned by Acarix and prepared and issued by Edison, in consideration of a fee payable by Acarix. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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New Zealand

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a) (11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

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Germany

London +44 (0)20 3077 5700

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NSW 2000, Australia

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